Data is at the core of a strategy sought out by Sweden’s AP1 SEK323bn (€31.2bn) from BlackRock, and which the Swedish buffer fund’s management notes is open to other professional investors via its Ucits structure.
The BlackRock Emerging Markets Equity Impact fund strategy was created by BlackRock’s Systematic Active Equity team, which uses data science techniques and machine learning to support investment decisions. It includes insights into sustainability. The team looks at companies positioned in the emerging markets space, in respect of countries, industries, macroeconomic trends and market conditions. Some $100bn in assets are managed this way for clients globally.
The strategy considers measurable social and environmental impact.
Majdi Chammas, head of External Asset Management and Tina Rönnholm, portfolio manager, External Management at AP1, said: “As an asset owner, we are constantly looking at how we can improve our portfolio from a sustainability point of view whilst targeting the returns we need for the pension system. Integrating ESG into investment processes has for a long time been our preferred route, and the use of differentiated, sustainability insights is no longer an obstacle in the emerging markets. We are therefore very pleased to see that our discussions with BlackRock have evolved into the development of this innovative new fund, open to other professional investors as well, where technology can help improve not only investment but also sustainability insights.”
Debbie McCoy, managing director and co-portfolio manager, head of Sustainable Investments within the SAE team, said: “We see a strong interest from clients who want to incorporate portfolio level sustainability considerations alongside traditional financial return targets for all their addressable investment universes including emerging markets. We are pleased to have the capabilities to deliver this solution for AP1, and respond to the sentiment being expressed by investors, especially in the Nordic region, to expand the sustainable investment universe.”
AP1 accounts for about a quarter of the capital in the Swedish national income pension system, according to the 2017 Ownership Report.
The fund’s mandate is to create return by investing in different asset classes, while maintaining a low level or risk, and adhering to sustainability objectives. Investments include equities, fixed income, property, infrastructure, private equity and hedge fund assets. As one of the country’s so called buffer funds, the level of net assets influence the pensions paid out from the income pension system. The funds are also used to even out differences between contributions and disbursements, the Ownership Report notes.